NYT Cargo Ships Treading Water Off Singapore, Waiting for Work The root of the problem lies in an unusually steep slump in global trade, confirmed by trade statistics announced on Tuesday.
WSJ Goldman Takes Heat for Conflicts at Whitehall Goldman is in an especially tricky position when acting as both a borrower and lender to itself, critics say.
WSJ US Median Home Price Declines 14% …first-time home buyers accounted for half of all purchases in the quarter, and many of them zeroed in on foreclosed homes.
FT Willem Buiter Inflection Popints and turning points – since you asked President Trichet’s statement that the cycle is at an inflection point is therefore quite consistent with the IMF’s forecast that real economic activity in the Euro Area will continue to decline for this year and much of the next.
FT US Foreclosure Program may be insufficient …the growth in problem loans is now migrating to prime borrowers and ordinary loans with 30-year terms and fixed interest rates.
Rex Nutting at Dow Jones reports:
“Home values in 20 major U.S. cities fell at the fastest rate on record in January and are now down a record 19% in the 12 months ending in January.
The Case-Shiller index tracks repeat sales on the same properties over time, but it closely tracks only 20 cities, not the whole country.
A similar index from the Federal Housing Finance Agency released last week found prices rose 1.7% in January, the first increase in a year. The FHFA index tracks the whole country, but relies on data from Fannie Mae and Freddie Mac, so it missed most of purchases financed by subprime loans earlier in the decade.”
It’s beginning to be clear that we can have much less faith in the government’s data releases.
A friend, call him “Kit”, works in Northern Louisiana building cabinets. He bids as a subcontractor on new housing, as well as remodeling projects. He told us today:
“I just don’t understand it. I haven’t seen it this bad since 1987. I just don’t understand it! I talked to my friends at the banks. They say they are willing to lend money. Interest rates are low. Building supply prices are low. But nobody is doing anything. It’s weird. I’m startin’ to worry.”
This time the low oil prices have crimped a big source of tax revenue for the state, but states like Louisiana usually don’t grow as fast in good times, or fall as hard as other areas in the nation in bad times. But now, the housing collapse is beginning to be felt there too. Zero Hedge shows a report from Deutsche Bank that projects various MSA’s home price declines. According to this report, the New Orleans area is due for about 27% additional fall in home prices before reaching bottom. We wanted to tell Kit the worst is over, but it’s not. The truth is even if the interest rate for buying homes is zero, the expectation is that prices will fall. Until that expectation changes, home sales and home building will be slow in the Bayou state.
